A market leader in retail logistics - Logistics evolved: Agility and Ability - Clipper Logistics
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A market leader in retail logistics
2017 Interim Results Presentation
7 December 2017
Logistics evolved: Agility and Ability
Disclaimer
This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-
looking statements can be identified by the use of forward-looking terminology, including the terms “believe”, “estimates”,
“plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other
variations or comparable terminology. These forward-looking statements include matters that are not historical facts and
include statements regarding the Company’s intentions, beliefs or current expectations.
Any forward-looking statements in this presentation reflect the Company’s current expectations and projections about
future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that
could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.
These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events
described herein. Forward-looking statements contained in this presentation regarding past trends or activities should not
be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this presentation. No representations or warranties are
made as to the accuracy of such statements, estimates or projections.
Please note that the Directors of the Company are, in making this presentation, not seeking to encourage shareholders to
either buy or sell shares in the Company. Shareholders in any doubt about what action to take are recommended to seek
financial advice from an independent financial advisor authorised by the Financial Services and Markets Act 2000.
2Agenda
1 Highlights – Steve Parkin
2 Financial review – David Hodkin
3 Operational review – Tony Mannix
4 Summary and Q&A – Steve Parkin
31 Highlights
Highlights
Group revenue growth of 21.1% to £199.7m (2016: £164.9m)
Group EBIT growth of 19.4% to £9.2m (2016: £7.7m)
Interim dividend of 2.8p per share, up 16.7% (2016: 2.4p)
Acquisition of Tesam and RepairTech completed and immediately earnings-enhancing
Clicklink click & collect network extended to other retailers including SuperGroup and Urban
Outfitters
New operations launched including ASOS returns in Poland, River Island and The Edinburgh
Woollen Mill Group
Continued organic growth particularly in ecommerce-related activities
Strong pipeline of new business opportunities
52 Financial review
Financial Highlights
Group revenue growth of 21.1% to £199.7m (2016: £164.9m), driven by strong growth in all divisions
Group EBIT growth of 19.4% to £9.2m (2016: £7.7m)
o E-fulfilment and returns management services – EBIT of £5.3m, up 25.7% (2016: £4.3m)
o Non e-fulfilment logistics – EBIT of £6.3m, up 6.3% (2016: £5.9m)
o Commercial vehicles – EBIT of £1.4m, up 13.5% (2016: £1.3m)
o Profit before tax and amortisation up 21.0% to 8.4m
EPS of 6.3p, up 18.9% (2016: 5.3p)
Interim dividend of 2.8p per share, up 16.7% (2016: 2.4p)
Acquisition of Tesam and RepairTech completed and immediately earnings-enhancing
Note: The highlights are for the 6 months ended 31 October 2017, as compared to the 6 months ended 31 October 7
2016Summary Income Statement
6m to 31
£m Change Year to 30
October
2016 2017 % April 2017
• Strong top-line performance in the period driven by all
Revenue 164.9 199.7 21.1% 340.1 business units
Cost of sales (117.3) (142.1) (241.1)
• Key EBIT metric saw continuing strong growth of
Gross profit 47.6 57.6 20.9% 99.0 19.4%, again driven by all business units
Other net gains 0.1 0.1 0.4
• Finance cost up slightly, due to acquisitions
Admin expenses (40.1) (48.3) (81.9)
Operating profit before share • Profit before tax and amortisation up 21.0% to 8.4m
of equity-accounted 7.6 9.4 19.4% 17.5 (2016: 6.9m)
investees, net of tax
Share of equity-accounted • Profit before tax ahead by 15.6% to £7.9m (2016 -
investees, net of tax - (0.6) 0.2 £6.8m)
Operating profit 7.6 8.8 16.2% 17.7 • EPS ahead by 18.9% to 6.3p (2016 – 5.3p)
EBIT 7.7 9.2 19.4% 17.9
• Interim dividend up 16.7% to 2.8p (2016 – 2.4p)
Less: amortisation of other
(0.1) (0.5) (0.2)
intangible assets
Share of tax and finance costs
- 0.1 (0.0)
of equity-accounted investees
Operating profit 7.6 8.8 17.7
Net finance costs (0.8) (0.9) (1.6)
Profit before tax 6.8 7.9 15.6% 16.1
Income tax (1.5) (1.7) (3.6)
Net income 5.3 6.3 12.5
Earnings per share (p) 5.3 6.3 18.9% 12.5
Interim dividend per share (p) 2.4 2.8 16.7% - 8Segmental performance
Revenue
£m 6m to 31 October Change
2016 2017 %
E-fulfilment logistics 58.9 76.1 29.2% • Strong growth in all aspects of Logistics:
Non E-fulfilment logistics 61.3 65.7 7.2% o Continuing organic growth with existing
Total logistics 120.2 141.8 18.0% customers, particularly in e-fulfilment (e.g.
ASOS, John Lewis and Wilkinsons)
Commercial vehicles 45.6 58.8 28.9%
Inter-segment sales (0.9) (0.9) o Full year benefit of prior year contract wins
(e.g. ADC for John Lewis, returns for M&S,
Group total 164.9 199.7 21.1%
new brands for a major international retailer)
o New contracts brought on stream (e.g.
Westwing, ASOS returns in Poland, EWM and
EBIT Secret Sales)
£m 6m to 31 October Change o Storage and packing of high value products
2016 2017 % • Continued Investment in solutions development and
E-fulfilment logistics 4.3 5.3 25.7% IT infrastructure
Non E-fulfilment logistics 5.9 6.3 6.3%
• Commercial vehicle growth driven by both new
Central logistics costs (2.6) (2.5) vehicle sales and aftersales
Total logistics 7.6 9.1 18.9%
• Share based payment charges increased by £0.2m
Commercial vehicles 1.3 1.4 13.5%
Head office costs (1.2) (1.3)
• Acquisition of Tesam and RepairTech immediately
earnings enhancing
Group total 7.7 9.2 19.4%
9Summary cash flow statement
£m 6m to 31 October Year to 30
2016 2017 April 2017
EBIT 7.7 9.2 17.9 • EBITDA ahead 27.3%
Depreciation & Amortisation 2.2 3.4 5.1
Other non-cash items1 (0.1) 1.2 0.6 • Working capital outflow due to one late customer
Change in working capital 2.5 (1.2) 2.0
payment of £1.6m
Cash generated from operations 12.3 12.6 25.7
• Strong underlying cash flow and cash conversion
Net interest paid (0.7) (0.9) (1.6)
Tax paid (1.5) (2.0) (3.2) • Majority of capex is back-to-back with agreements by
Net cash flows from operating activities 10.1 9.7 20.8 customers to repay the capital through open-book
as % of EBITDA2 103% 76% 91% contract mechanisms
Net capital expenditure (5.6) (3.6) (2.3)
Investment in joint venture (2.0) - (2.0)
Acquisition of subsidiaries - (11.8) -
Net cash flows from investing activities (7.6) (15.4) (4.3)
Loan advance to joint venture (0.3) - (1.4)
Net drawdown of bank loans 4.9 14.1 (6.0)
Finance leases advanced 2.1 - 4.9
Repayment of capital on finance leases (2.7) (3.7) (5.7)
Shares issued - 0.2 -
Dividends paid (4.0) (4.8) (6.4)
Net cash flows from financing activities 0.3 5.8 (14.6)
Net increase / (decrease) in cash & cash
2.5 0.1 2.0
equivalents
1. Other non cash items comprise share of equity-accounted investees, share based payments, exchange
differences and movement in fair value of derivatives
2. EBITDA calculated as EBIT plus depreciation and amortisation
10Summary balance sheet
Year to
£m 6m to 31 October
30
April
2016 2017 • Acquisition of Tesam (May) and RepairTech (June)
2017
• Investment in fixed assets largely to support new
Intangible assets 24.8 36.8 24.8
open-book contracts under which capital will be
Property, plant & equipment 38.3 46.7 38.9 repaid over the term of the contract
Interest in equity-accounted
2.0 1.6 2.2
investees • Net debt £38.8m, in-line with the Board’s
Non-current financial assets - 1.4 1.4 expectations
Deferred tax assets - - 0.3
Non-current assets 65.1 86.5 67.6
Inventories 37.2 30.9 30.0
Trade & other receivables 57.5 70.8 47.7
Cash & cash equivalents 1.5 0.9 0.9
Current assets 96.2 102.6 78.6
Trade & other payables 102.4 110.6 85.1
Borrowings 6.7 7.8 7.4
Short term provisions 0.1 0.3 0.1
Current tax liabilities 1.8 1.9 2.2
Current liabilities 111.0 120.6 94.8
Borrowings 24.9 33.3 20.0
Long term provisions 0.8 1.4 1.3
Deferred tax liabilities - 1.3 -
Non-current liabilities 25.7 36.0 21.3
Net assets 24.6 32.5 30.1 113 Operational review
Overview
The Group’s strategy is set around four key principles – all of which have seen positive developments
during the period under review:
Build on Clipper’s market leading customer proposition and continue to expand the customer base
Continue European expansion through our profitable German platform
Develop new, complementary products and services
Consider complementary acquisition opportunities
13E-fulfilment and Returns Management Services
The positioning of Clipper as a retail solution provider has generated new contracts:
o Secret Sales
o Westwing
o ASOS – returns facility created in Poland - Boomerang
o M&S – further product group expansion
o Fenty Cosmetics within Harvey Nichols
o River Island – returns management – Boomerang
o M&S – national returns centre project – Boomerang
o Clicklink - third party “onboarding” continues – Superdry, Urban Outfitters,
Anthropologie, Ted Baker (into JLP), Inditex (Pull & Bear and Bershka) and Jaeger
are now “live”
The Ollerton site has been extended (60ksqft) to accommodate further Wilko growth
The ADC site has been extended (140ksqft) to be ready for anticipated growth in
customer activity
Extended contracts with ME+EM and Browns
We have a strong pipeline of opportunities to work through in 2018
Completed the acquisition of RepairTech – immediately earnings enhancing
14Non E-fulfilment
A further strong performance in the period.
Set up a store fulfilment operation for Store Twenty One
Further developed the Store Returns Centre solution for M&S
Successfully started the transport solution for the Edinburgh Woollen Mill group of
companies – EWM, Ponden Mill, Viyella, Jane Austen, Peacocks & Jaeger. Over 1000 stores
across UK and Eire
Implemented the BAT Vype solution
Commenced the transport solution for Crosswater Holdings
Completed the acquisition of Tesam – immediately earnings enhancing
15RepairTech & Servicecare
Both businesses are now fully integrated into the Clipper family and have a Clipper “look and feel"
running through their websites etc. whilst retaining their brand names
Samsung are training the team to handle high-end LED equipment
HiSense, the fastest growing global TV brand, have selected RepairTech as their UK partner
Foxconn (Sharp) have selected RepairTech as their UK partner
VESTEL have selected RepairTech as their UK partner
JLP have appointed us for extended guarantee work on Nintendo, Toshiba and Linsar TV
The Southam RepairTech facility is being extended to double capacity
We have secured a new contract with Anker (the largest supplier of small electronics to Amazon)
which will see us handle all return/refurbishment activity for sale on the Amazon certified
refurbishment solution
We are also now providing services to Karcher and AO 16Team Development
We have developed a number of initiatives throughout the period to further enhance Clipper as an
employer of choice:
Created a senior management role focused on Learning & Development
Created a senior management role focused on Talent Acquisition
Relaunched the Graduate scheme and refocused attention on key universities and the Novus
Trust
Developed the Competency Framework across all levels of the management team
Developed the Intranet and have worked to enhance internal communication
Industry Awards in Period
Reverse Logistics Award (ASOS Bridal-wear) – Supply Chain Excellence Awards 2017
Supply Chain Leader of the Year 2017 – Retail Week Supply Chain Awards
17Black Friday – A Few Observations
More than a third of UK sales were made on mobiles this Black Friday, with 15% made via
tablet and 49% made from desktops. 60% of all sales made between 6 and 9am in the UK on
Cyber Monday were made from mobiles or tablets.
Cyber Weekend 2017: The year mobile toppled desktop for sales
https://www.campaignlive.co.uk/article/cyber-weekend-2017-year-mobile-toppled-desktop-sales/1451276
John Lewis achieved a daily sales record on Black Friday: sales at the store rose 7.2% in the
week to 25 November compared with the same week last year to hit a weekly high of £214.3m.
Beauty products sold particularly well, with sales up 27.5%, electrical products and women’s
fashion were up 9.7% and 8.3% respectively.
John Lewis defies the gloom to hit Black Friday sales record
https://www.theguardian.com/uk-news/2017/nov/28/john-lewis-defies-the-gloom-to-hit-black-friday-
sales-record
The amount spent on UK online retail sales on Black Friday 2017 was up 11.7% to £1.39bn
according to IMRG – up 9% on forecast. IMRG Black Friday 2017
184 Summary and Q&A
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